Canada's oilsands.

Photograph by: Postmedia News files
, Postmedia News

OTTAWA — The Conservative government’s push to export oil and natural gas to more markets outside of the United States could add more than $4 billion a year to government coffers, but only if commodity prices rebound.

The figure contained in the federal budget, along with veiled references to the contentious Keystone XL pipeline project, underscore the federal government’s interest in selling Canadian oil because doing so successfully — and at the right price — could reduce the budget deficit faster than promised.

The budget deficit for the last fiscal year, which ends on March 31, is estimated to stand at $25.9 billion, down from the $26.2 billion recorded one year earlier.

Total federal debt is expected to hit $627.4 billion this fiscal year.

The government intends to slash the deficit by $7.2 billion to $18.7 billion by March 31, 2014, and then make a $12.1 billion cut to further reduce the deficit to $6.6 billion by March 31, 2015. By the end of March 2016, the Conservatives are projecting a budget surplus of $800 million.

All of those projections depress revenue expectations by $3 billion to adjust for risk.

If $4 billion or more could be added annually to federal coffers, the country would be in a surplus position one year earlier.

“The reason that Canada has done so well, compared to a lot of G7 economies … is because of our strong resource sector,” said Dave Walsh, a partner with accounting firm Ernst & Young LLP.a.

“There’s no doubt that if that sector explodes, the whole Canadian economy will (benefit).”

However, the budget offers little in way of tax incentives or other spending measures to further the government’s focus on energy exports, Walsh said.

Observers predict that Canadian crude oil will close the current $22 per barrel price gap with American crude oil by mid-2014.

That would increase the value of exports by $8 billion a year.

If natural gas exporters received even half the price European producers earn for their product, the boost to the Canadian economy could total $20 billion.

Combined, that’s a $28-billion boost in GDP, which could help decrease unemployment and increase government revenues on corporate and excise taxes.

“That’s a big deal. There’s nothing driving Canada’s economy these days more than the oil business,” said Gabe Hayos from Chartered Accountants of Canada.

But the country’s GDP growth projections are subdued.

The Canadian economy is expected to grow 1.6 per cent in 2013, according to government estimates — a figure that doesn’t include growth due to inflation. The growth is projected to increase to 2.5 per cent in 2014 and 2.6 per cent in 2015.

Over the same time period, unemployment is expected to drop modestly, with the rate holding at 7.1 per cent in 2013, and then falling to 6.9 per cent in 2014 and 6.7 per cent in 2015, according to government projections.

“There’s no doubt the economic turmoil caused in 2008-09 has lasted longer than … predicted,” said Walsh. The growth predictions, he said, are “low by historic standards.”

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